Italy and Japan: Troubled Twins of Globalization

It might seem odd but two inward-looking countries from old Europe and the Pacific, troubled twins with such strong cultures, offer insights into the future of globalization: Italy has “campanilismo,” or loyalty to the village bell-tower. The Japanese talk about “takotsubo-ka,” being caught in the clay pot that traps octopus.

Japan is the world’s third largest economy and Italy is ninth—though both have slipped in recent years. Both attract millions of visitors each year and sell their products around the world, yet remain stuck in a mindset that is fundamentally provincial.

Provincialism. Insularity. They may seem like bad words, but any visitor to these countries senses that fierce attachment to culture is part of what make Italy and Japan attractive. Visitors strolling into any village in either country, who ask for the local specialty, are treated to unforgettable delights. Both countries have an astonishing array of living dialects that are nearly incomprehensible to people from other parts of the country.

Provincialism can just be a snooty way of saying cultural vibrancy, but it can also be an economic shackle.

Japan and Italy are major developed economies that are struggling mightily with the tradeoffs between preserving a way of life and adopting reforms—such as inviting foreign workers, promoting free competition, and liberalizing labor—that could allow them to succeed in a globalized world.

An insular approach to life offers insights into shared problems. A strong sense of community in both countries, so often admirable, encourages a climate of vested interests that can paralyze politics. Social factors—including respect for elders, expectations of mothers, narrow-minded workplace attitudes—explain the inability of both nations to produce enough babies. A low fertility rate—1.4 births per woman—is the single biggest threat to both economies today.

Central to both cultures is a quest for perfection, rooted in insular guilds or trade associations that illuminates strengths as well as frailties in the countries’ economies. Suspicion of outsiders combined with fixation on how others perceive them—Italy’s “bella figura” and Japan’s “mentsu,” keeping face—are two sides of the same coin and inform the challenges both nations grapple with in an age of globalization.

Japanese Prime Minister Shinzo Abe and Italian Premier Matteo Renzi have struck bold paths of reform and need every encouragement to succeed. In Japan, Abe has just unleashed his “third arrow” of structural reform after startling the world by battling deflation with his first two arrows. Renzi is tackling Italy’s legislative paralysis with plans to overhaul Parliament. But both Japan and Italy have seen false dawns in recent decades, with previous reformers brought down by cultures of vested interest at the center of provincial life.

History and Geography

History and geography play a role in both countries’ insular inclinations.

If France is a solid hexagon in which power radiates naturally from Paris, Japan and Italy are long and narrow, jutting southward, one tilted west and the other east, near mirror images with mountain ranges cutting down the center, fostering communities that develop in isolation. Both are protected from outsiders, and made vulnerable to them, by water—informing paradoxical attitudes to the wider world. Both largely define themselves by centuries of warring among tiny states, historical periods filled with intrigue, heroism, and ghastly score-settling before traumatic unification.

Modern history, too, sheds light on the countries’ current predicaments.

It’s no coincidence that Italy and Japan have such high national debt—in Japan, government debt owed per person is about $90,000; for Italy, it’s $46,000—for addiction to deficit spending is embedded in their postwar experiences: Both have been command economies that enjoyed growth miracles overseen by political juggernauts—Italy’s Christian Democrats, Japan’s Liberal Democratic Party—fostered by a United States eager for stability in former enemies seen as susceptible to communism.

In such a climate, both nations prospered in environments of provincial patronage and corruption, in which the mob—Japan’s Yakuza, Italy’s Cosa Nostra—often was a hidden government partner.

And insularity means Italy and Japan are conservative in the most basic senses: how communities resist change or families have an instinct to sock away money. Neither the Japanese nor Italians, in general, jump jobs if they can help it. There are strong expectations, increasingly resisted but still deeply felt, for trades to pass down through generations. Such conservatism provides protections, even as it makes one vulnerable in times of change.

Perfectionism’s Pros and Cons

The quest for perfection can be obsessive, yielding some of the countries’ greatest glories: knife blades, cameras, cultured pearls, kaiseki cuisine, and Kabuki, to name a few in Japan; handcrafted shirts, the perfect noodle, Ferraris, furniture, and Barbarescos, among others in Italy. In both cultures, there is little distinction between craftsmanship and art.

But perfection can be stifling. It can make people miss the big picture and lead to baffling mistakes. It fosters clannishness. It can crush the spirit of all but the strongest, who might emerge from years of apprenticeship, doing the same task relentlessly, with the confidence to innovate and explore.

While a brotherhood of craft has value, it is also a collusive force that rises from seas, fields, and workshops and wraps its tentacles around political power centers—Nagatacho in Japan, Montecitorio in Italy. The cult of perfection may also not be the best way to run a 21st-century economy, fostering what economists call low productivity.

Provincialism informs race issues. Italy is one of the few Western democracies in which a senator could compare a black cabinet minister to an orangutan and get away with it. In Japan, cabinet ministers are almost Berlusconian in their talent for giving offense—a finance minister last year offered his wisdom on constitutional reform by suggesting that Japan could learn a lot from the Nazis on that front. Both nations are notorious for electing mediocre personalities, so one should not be too shocked. More surprising is how ordinary people can utter strikingly racist comments while overwhelming foreigners with kindness.

Stifling Fortresses

Both countries need immigrants to invigorate the economy. Instead, Italy and Japan remain two of the hardest countries to obtain citizenship without a blood link.

In Japan, big business and the government erect a fortress blocking foreign takeovers, and private equity is a particularly evil word among the Japanese—although such attitudes may be changing. In Italy a thicket of Byzantine regulation—which even Italians admit to not understanding—is a major deterrent for foreign companies to set up business.

Family and respect for elders, the heart of provincial life, make life a “grande bellezza” in both countries. But these are also problems. Old people block the young from fulfilling dreams by sitting on wealth and power. The young live with parents until well into adulthood, with ambition too often gently smothered in a pillow of love.

Both Japan and Italy have problems, but so many of these can also make these countries so appealing.

Take productivity. There is a beauty in rolling into a Japanese gasoline station to find oneself swarmed by attendants who greet, wipe and pamper while another fills the tank. In Italy, one buys a “scontrino” at the “caffè,” hands the slip to the barman, who makes the coffee and instructs another busy colleague to fetch a “cornetto.” Both are textbook examples of inefficiency, and no law makes Japanese and Italians perpetuate them, yet they are part of the poetry of life.

Both countries may or may not be better off without such services. But don’t ask this free-market globalist who finds himself happiest and most at home in Italy and Japan.

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